The most economical 30-year new purchase mortgage rates in America on Friday could be found in nine states – California, Pennsylvania, Texas, Florida, New Jersey, Arizona, Georgia, North Carolina, and Ohio, with the averages ranging from 6.72% to 6.79%. In contrast, the highest rates were in Iowa, Maine, Washington, D.C., Alaska, North Dakota, New Mexico, Rhode Island, and Vermont, averaging between 6.90% and 6.91%.
The geography of mortgage rates is heavily influenced by factors like regional credit score averages, loan sizes, and regulations. Also, lenders' risk management strategies differ, impacting the rates on offer. That’s why it’s crucial for potential borrowers to regularly compare rates across lenders.
Advertised rates online can often appear more appealing than they actually are, as these 'teaser rates' often require upfront payments and assume a hypothetical borrower with exceptional credit or a smaller-than-typical loan. The rate a borrower secures will depend on their personal situation including credit score, income and other factors. It’s worth noting that the average rate for 30-year new purchase mortgages fell to 6.82% on Friday, the lowest in the week.
In September, the 30-year rates dropped to 5.89%-their lowest in two years-only to rise to as high as 7.13% by January, before recent reductions.
Macroeconomic factors and industry complexities determine mortgage rates. In 2021, the ongoing purchase of billions of dollars in bonds by the Federal Reserve in response to the pandemic kept the mortgage market reasonably low. From November 2021, however, the Fed started to decrease these purchases until they reached zero in March 2022.
From this period to July 2023, the Fed increased the federal funds rate dramatically to combat historically high inflation. These changes, though indirect, significantly impacted the mortgage rates. The Fed then started to decrease the rates from September 2023, but has kept them stable since the new year began.
It will be interesting to observe how the mortgage rates will change throughout 2025, given that the central bank may not make another rate cut for several months. The national and state averages cited are sourced from the Zillow Mortgage API and assume a loan-to-value ratio of 80% and an applicant credit score in the 680–739 range. Thus, actual borrower rates may diverge from these averages and advertised rates.